In: Accounting
Question Set 2. For this question set, you will calculate labor productivity and multifactor productivity, both in tons of rice produced per dollar value of inputs.
A Rice Manufacturer employs 75 field workers (each working 40 hours per week at a wage of $10/hr) and 20 line workers (each working 40 hours per week at a wage of $20/hr).
The business has capital expenses of $15,000 per week and produces 375,000 tons of rice per week.
Recently, the company decided to invest on additional equipment which increased the capital expenses by 6%. Also, the number of field workers was cut short by 25% whereas line workers were 1% more recruited. Both filed and line workers were given a raise of 8% and 5% respectively. Due to the above-mentioned changes, the new system reported to have a 4% more output than the old system.
You will need the following formulas:
Labor productivity = [Weekly output][Weekly total labor cost]
Multifactor productivity = [Weekly output][Weekly total labor cost+Weekly capital expenses]
After copying the table below into Excel, solve the following questions and fill the table
OLD SYSTEM |
% CHANGE |
NEW SYSTEM |
|
Number of Field workers |
75 |
-0.25 |
? |
Hours |
40 |
||
Wages |
10 |
0.08 |
? |
Total cost for field workers |
? |
||
Number of Line workers |
20 |
0.1 |
? |
Hours |
40 |
||
Wages |
20 |
0.05 |
? |
Total cost for line workers |
? |
? |
|
TOTAL LABOR COST |
? |
? |
|
Capital expenditure |
15000 |
0.06 |
? |
Output |
375000 |
0.04 |
? |
LABOR PRODUCTIVITY |
? |
? |
|
MULTIFACTOR PRODUCTIVITY |
? |
? |
|
% CHANGE FOR LABOR PRODUCTIVITY |
? |
||
% CHANGE FOR MULTIFACTOR PRODUCTIVITY |
? |
Calculate the Total Input Cost for Old and New systems (Labor cost + capital expense) (2 pts)
Calculate the Capital Expenditure and Output of the new system (2 pts)
Calculate labor productivity including all employees (line workers & field workers) for the old and new systems, in tons of output per dollar of input. (4pts)
Calculate the multifactor productivity (including line workers, field workers, and capital expenses) for the old and new systems, in tons of output per dollar of input. (4pts)
Calculate the percentage changes in labor and multifactor productivity. (3pts)
After copying the table given in question into Excel and filling the table, we get
The above table in form of formula for better understanding is as shown below:
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